hello... i'm in my late 20's, have a good job and a college degree. I have 5% of my pay checks going into my 401k and another 15% going into a variety of mutual funds and bonds. I have been toying with the idea of opening a online broker account to buy/sell stocks with money that is left over once bills are paid and my investments are made. I have been following a few well respected players in the motley fool contest and was considering following a certain players picks with "money I can afford to play around with". Is this foolish? ty.

You have the 401K and money in mutual funds, which is a good thing. Investing in stocks takes a lot of experience. You will need to build $10,000 - $20,000 before getting into stocks. In the mean time you may want to try picking some stocks without money and track how you do in a spreadsheet to get a feel. Read a few good books - any books by Peter Lynch are good (One Up On Wall Street and Beating The Street). Plus lots of good reading here; http://www.fool.com/school/basics/basics.htm?source=ifltnvpnv0000001

When you are ready to jump in, you will need to keep doing homework on the stocks everyday. You will want to be diverse by owning stocks in at least 5 different companies in 5 different sectors.

You will want to buy enough shares to keep cost down (under 1%). ex. Buying 50 shares of a $20 stock at a trading fee of $10 = 1%

Don’t buy all at once - buy in thirds or quarters so you can cost average.

I have to respectfully disagree with Razz. No need to wait till you have $10K. I think $1K will keep the transaction cost around 1%.

As for following someone else, well, you can do it that way, but will you really be learning anything? I agree with Razz in the recommendation to read Peter Lynch and other investing books. There are several that explain Warren Buffet's methods that will have good information.

Just beware, that there is no ONE WAY. You will will collect a lot of conflicting information. You will have to sift through it all and decide for yourself what you believe and want to do.

I have 5% of my pay checks going into my 401k and another 15% going into a variety of mutual funds and bonds

Because it appears you have plenty of "headroom" in your budget you may want to consider reversing those percentages. Getting more resources into your retirement funds early for tax free growth will make a huge difference later in life. Of course each individual has his or her own unique circumstances, but if you prioritize a comfortable retirement over a fancy car now, for example, then I would seriously consider putting more in the 401k than the non-retirement account savings.

My reasoning for the $10,000 figure (besides being a nice round figure) is so a person can buy stock in at least 5 different companies. Yeah, you can do all right with $5000.

Another reason is that it shows good savings discipline and patience before investing in stocks.

Yes, $1000 is enough to take a position a company; I do that all the time but, with only $1000 you can only take a position in one company and will have no money on the sidelines to get more if the price drops.

hello... i'm in my late 20's, have a good job and a college degree. I have 5% of my pay checks going into my 401k and another 15% going into a variety of mutual funds and bonds. I have been toying with the idea of opening a online broker account to buy/sell stocks with money that is left over once bills are paid and my investments are made. I have been following a few well respected players in the motley fool contest and was considering following a certain players picks with "money I can afford to play around with". Is this foolish? ty.--------------

There's no reason why you can't have a little fun when it comes to investing - as long as you have a solid retirement investment plan that you stick to and contribute to on a regular basis.

I would make the "play around account" separate from your regular investment accounts and keep the dollar figure rather low, percentage wise. Chances are that you will lose money in this account over time by chacing performance (buying high and selling low) along with commissions fees - so, be ready for that.

Also, you might want to look into Exchange Traded Funds (ETFs) instead of individual stocks if you want to lessen your risk a little.

One last thing...you will enjoy this fun account more if you take responsibility for what you select to buy and sell yourself and not follow someone else's picks. Do your own research and learn while you play.

I would also have to disagree about needing $10,000 to get into investing, but totally agree with being diversified. If you look around you can find borkarage firms that let you buy portions of shares and set up an automatic investing plan. This way you can purchase 5 or 6 stock or ETFs each month. Because you are buying each month there is built in average buying. Price goes up, you're getting a smaller percentage of a stock, price goes down you get a higher percentage. This assumes that you intend to buy and hold and that you're not trying to time the market.

No, I don't think you are doing anything wrong as long as the money you will be playing around with is money you don't need. I am doing hte same thing and I am looking at CGMFX. This is a fund that needs to be held over the long run as it is very volatile but has averaged over 25% over the last ten years. In 2007 it went up almost 80%. But you can't look at this fund on a daily basis because it will scare you. Look at it over the long run. Buying and holding this fund is the only way to go if you do.

About three years ago I had holdings in CGMFX. I bought it around 57 and held onto it way longer than I should have. I eventually got out around 33. I just checked a few mintues ago and now it is 27. Although Hebner manages this fund it has a very high turnover rate, upwards of 500%. Please due your due dillagence before investing in this fund. Wish I had.